Comments 0

Document transcript

FROM PAGE 22“Some people ask how to pay withbitcoins just out of curiosity but paywith cash or bank cards,” he says.Sun Yan, a 22-year-old holder ofbitcoins in Wuhan, says he believesthat even if bitcoins fail to achievewidespread recognition and survivein the long term, it is meaningful inthat it pushes forward the develop-ment of digital currency. Sun holdsthree coins, all of which were boughtfrom online traders.“Just as bank cards in many wayshave replaced banknotes, digital cur-rencies will do the same thing. All weneed is a wider network that acceptsdigital currency,” Sun says.Risks remainChang says he and many otherbitcoiners have been aware of thepotential risks of holding bitcoins.One possibility is that governmentsmay decide bitcoins are illegaland conduct a crackdown on theexchange platform.The US Commodity Futures Trad-ing Commission is exploring wheth-er bitcoins fall under the UnitedStates regulator’s purview, reportedthe Financial Times.“It’s not monopoly money we’retalking about here. Real people canhave real risks with these instru-ments so we need to ensure that weprotect markets and consumers evenin what at ﬁ rst blush appear to be‘out there’ transactions,” said BartChilton, one of the ﬁ ve commission-ers at the US Commodity FuturesTrading Commission, the FinancialTimes reported on May 7.For bitcoiners in China, the newsis a signal that the currency maybecome more widely accepted.“Putting bitcoins under regula-tion means they are not regarded assomething outlawed and so they arerecognized as a currency. If authori-ties want to see the currency die,they can just announce it is illegal,”Chang says.Wang Yujie, a 27-year-old wealthmanager in Shanghai and a holderof bitcoins, says he has consideredthe possible risks that may aff ect thevalue of his bitcoin deposits.“It may become illegal if theauthorities announce as much. Itmay be replaced by more advanceddigital currencies. Individual e-wal-lets may be hacked and people willworry about safety issues. The entiresystem may be corrupt,” Wang says.In March, a branch of the US Trea-sury Department said all exchangesor transfer platforms of bitcoins willbe considered as “money servicesbusiness”, which means companiesinvolved must provide informationto the government and introducepolicies to prevent money launder-ing. Since then, at least three compa-nies in North America have report-ed having their business accountsclosed by their banks. Bitﬂ oor, a NewYork-based Bitcoin exchange, says itis shutting down entirely and hasnot yet been able to return funds tocustomers.In China, the transferring andtrading platforms of bitcoins arerun by individuals and the pricesand exchange rates are aff ected byoverseas platforms, Shen says.Currently no domestic authoritiesclaim responsibility for regulatingthe bitcoin market in China.“The safety of trading bitcoinson these platforms mainly relies onpeople’s trust and good faith,” Shensays.Wang says he has explored thecurrency and understands how itworks because some clients askedhim whether bitcoins are worthinvesting in.“My answer to my clients at thecurrent stage is: ‘Wait for anotheryear to see how regulators mayrespond to it’ because I regard it as abig risk if bitcoins are declared ille-gal,” he says.The mechanism of bitcoins, whichchallenges many banking industryinsiders’ current knowledge andunderstanding of currencies, maybe obscure to wealth managers andinvestors even if they have decadesof expertise in investments in tradi-tional areas.“Bitcoins are highly technical inalmost every step from their issu-ance to payment. It takes time forpeople to understand how the sys-tem works and decide whether it isworth real money,” Wang says.The issuance of bitcoins basedon computational calculation setsa benchmark that is too high forinvestors without much knowledgeor interest in information technol-ogy, says Liu Xinyue, an investor ingold and silver futures in Shanghai.“I heard my son talking about thebitcoin and I got a headache just twominutes after he started explainingit. It’s all too complicated and bizarreto me. I think this may be one of thebiggest barriers for investors likeme,” Liu says.PROVIDED TO CHINA DAILYA pile of newly minted bitcoins arranged for a photograph in Sandy, Utah, in the United States. Created four years ago bya person or group using the name Satoshi Nakamoto, bitcoins are a virtual currency that can be used to buy and sell abroad range of items — from cupcakes to electronics. People can also pay with bitcoins in various coff ee shops, phone andcomputer stores and bookstores in big Chinese cities including Beijing and Shanghai.A GLANCEAT BITCOINDEVELOPMENT• 2008: Pseudonymous devel-oper Satoshi Nakamoto posteda paper describing the bitcoinprotocol on the Internet. Naka-moto called it a peer-to-peer,electronic cash system.• 2009: Bitcoin network estab-lished; ﬁ rst open source bitcoinclients joined the network andﬁ rst bitcoins issued. Bitcoincreation and transfer is based onan open source cryptographicprotocol and is not managed byany central authority. Each bit-coin is subdivided down to eightdecimal places, forming 100 mil-lion smaller units called satoshis.Bitcoins can be transferredthrough a computer or smart-phone without an intermediateﬁ nancial institution.• 2010: First bitcoin transactionswere negotiated by individu-als on the bitcoin forums. Onetransaction was a pizza sold for10,000 bitcoins.• 2010: A major security ﬂ awfound and exploited.• 2011: First bitcoiners in Chinastarted “mining” and tradingbitcoins.• 2012: More bitcoin tradingplatforms established andincreasing number of storesaround the world said they wouldaccept bitcoin payments.• 2013: Bitcoin prices ﬂ uctuateviolently. On April 10, the bitcoinexchange rate dropped from$266 to $76 before returning to$160 within six hours.• 2013: Market valuation ofthe total stock of bitcoins ap-proached $1 billion. Critics saidbitcoin prices are a bubble.Some said it’s a Ponzi scheme,constantly relying on newcustomers who eff ectively payexisting ones.• 2013: Speculation in bitcoinsbegan in China.— WU YIYAOCHINA’S NETIZEN POPULATIONSource: CNNIC ZHANG YE / CHINA DAILYUnit: million peoplePENETRATION RATE OF CHINA’S INTERNET USERSUnit: percent200820072006 2009 2010 2011 2012 2013 2013 March200820072006 2009 2010 2011 2012 2013 2013 March578564513.1457.33842982101371118.5 10.5 16.0 22.6 28.9 34.3 38.3 42.1 43.1PAGE 2 3J UNE 7 - 1 3, 2 0 1 3